Quezon City, Metro-Manila, Philippines
Achieving, sustaining, and improving quality goods and/or services are fundamental to any organization desiring to compete (or at least, survive) in today’s highly competitive global marketplace. Just like any other organizational processes/ resources, Quality has to be managed properly along with the firm’s cost-effectiveness and responsiveness goals to ensure that the most-appropriate sourcing, production/ operations, distribution, and pricing strategies are properly formulated and executed.
This blog is premised on a situation where the business-strategies have already been established i.e., the most appropriate mix of cost-leadership, differentiation, and/or responsiveness that will ensure continuity of the business and/or products being managed.
Some modern quality concepts
Modern thinking and practice have defined Quality as the totality of features and characteristics of a product and/or service that bears on its ability to satisfy stated or implied needs (ASQ). This definition has evolved over time, and has been understood and interpreted differently by different people, depending on their respective roles in the value-chain—a very important consideration when embarking on a discussion on this subject; otherwise, confusion will most-likely arise..
The modern way of managing quality has evolved from the Total Quality Management (TQM) movement of the 1990s, and is currently being considered by many as assurance to long-term organizational success. While the word “total” has already been dropped by most practitioners for quite some time now, but the principles of TQM continue to drive the pursuit of organizational-excellence among progressive companies, and is now simply called as Quality Management (QM).
However, with the very dynamic competition in the marketplace, most organizations have been treating QM as being synonymous to quality-improvement (QI)—mainly, to sustain their relative competitiveness, if not survival. It is for this reason that fact-based problem-solving and decision-making is essential when embarking on any QI-initiative, considering that the management adage “you can only improve what you can measure” is very much applicable in QI; otherwise, the said non-measurable QI-initiative could simply be considered as mere lip-service by passionate executives.
Where do I Begin?
A framework shown in Figure 1 below, was developed for the purpose of reminding QI-proponents and stakeholders, on the important things to consider when embarking on a QI-initiative—at and within the tactical – strategic continuum—and ensure that all pertinent activities and use of resources are aligned with, and supportive of the approved business strategies.
What factors to consider?
It is easy to get drowned in the sea of quality issues and concerns in an ongoing business enterprise that is serving a free capitalistic market. In order to avoid this, it is important that the goal of pursuing the highest possible operating efficiency and effectiveness be emphasized to all stakeholders.
Being effective means delivering products and services in accordance with Customer’s expectations in all their value-dimensions. This will most-likely yield satisfied Customers and consequently a continuing (and possibly increasing) revenue-stream. Operating efficiently, on the other hand, will enable enterprise to operate at competitive cost-levels which could provide the additional leverage in pricing decisions.
In sum, while operating effectiveness ensures continuing (if not increasing) revenue-stream; an efficient operation ensures lower cost-stream i.e., two contra-forces that work together towards a favorable and sustained profitability.
A. On being effective
To be effective, it is important that the enterprise be able to capture the need and wants of its Customers i.e. demand-side factors, depending on the dominant products and /or operating mode that is being managed.
For physical-goods, Harvard’s Dr. David Garvin (1987) proposes that the following 8-dimensions (of goods-quality) be properly weighed as to their relative importance by the targeted-Customers.
- Performance – refers to a product’s primary operating characteristics. This dimension of quality involves measurable attributes; brands can usually be ranked objectively on individual aspects of performance.
- Features – additional characteristics that enhance the appeal of the product or service to the user.
- Reliability – the likelihood that a product will not fail within a specific time period. This is a key element for users who need the product to work without fail.
- Conformance – the precision with which the product or service meets the specified standards.
- Durability – measures the length of a product’s life. When the product can be repaired, estimating durability is more complicated.
- Serviceability – the speed with which the product can be put into service when it breaks down, as well as the competence and the behavior of the service-person.
- Aesthetics or Style – the subjective dimension indicating the kind of response a user has to a product. It represents the individual’s personal preference.
- Perceived Quality – the quality attributed to a good or service based on indirect measures, which may not necessarily be true.
Once the importance-levels of the above will have been established, prioritization could then proceed with the end-in-view of focusing QI-efforts on the critical dimensions i.e., those few-dimensions that have significant impact on the Customers.
For services, on the other hand, Dr. Parasuraman (1985) proposes the following 10 service-quality determinants:
- Tangibles – Physical evidence of service i.e., Reports, inspections.
- Reliability – Consistency of performance and dependability.
- Responsiveness – Willingness and readiness to perform services.
- Competence – Possession of skills and knowledge to perform.
- Credibility – Trust and personal characteristics of personnel.
- Security – Safety, financial security, and confidentiality.
- Courtesy – Friendliness of personnel and ownership.
- Access – Approach-ability and ease of access to management.
- Understanding – Knowing the customer’s needs and requirements.
- Communication – Providing the customer with effective information.
To facilitate their measurement, modern-day researchers have clustered the aforementioned determinants into five, and thenceforth used in measuring service-quality in conjunction with a survey-instruments called SERVQUAL. These five service-quality dimensions are as follows:
- Reliability – the ability to perform a service dependably and accurately.
- Assurance – the ability of the service-provider to inspire confidence and trust.
- Tangible – includes all facilities, equipment, staff-appearance etc.
- Empathy – the extent to which caring, individualized service is given. This already includes the determinants Competence, Credibility, Security, and Courtesy.
- Responsiveness – the willingness to help and respond to customer need. This already includes the determinants Access, Understanding, and Communiaction.
B. On being efficient
The efficiency by which an organization operates is mostly driven by supply-side factors:
- Availability – is the available time the supply-side facilities are productive, taking into account all downtime. An Availability score of 100% means the process is always running during Planned Production Time.
- Performance – is the degree to which production/ delivery approaches a certain management-approved state, taking into account slow-cycles and disruptions. A Performance score of 100% means when the process is running it is running as fast as possible.
- (Internal) Quality – the proportion of acceptable production/ delivery, taking into account defects/ defectives and reworks. A Quality score of 100% means there are no defects (only Good Parts are being produced)
- OEE Index – is the overall index of supply-side performance taking into account all losses. An OEE score of 100% means you are manufacturing only Good Parts, as fast as possible, with no Stop Time.
These aforementioned supply-side factors are being depicted in the left-side of our framework (Fig. 1). The computational details of the OEE concepts are well-elaborated in OEE.com .
In filtering/ prioritizing QI-interventions for the supply-side factors, it is important that the significant constraints be recognized foremost i.e., those that prevent the organization from achieving its operating objectives; and from satisfying the identified needs and wants of the its Customers. Using the Theory of Constraints in conjunction with Pareto Analysis should come in handy at this stage.
Continuous or Continual Improvement?
Let’s just get on with it, for as long as relevant quality features and/ or characteristics are being improved without let-up. The Japanese called this “Kaizen”, and the Americans have refined this with supporting concepts and methodologies that were developed by its Quality-Gurus such as the PDCA-cycle.
In our framework (Figure 1), the Continual Improvement concept is situated at the center and is being depicted by a ramp with ascending wheels bearing the words Plan, Do, Check, and Act which are to be executed in a cyclical manner—and continually, at that. Going up the ramp depicts the additional efforts (against gravity, if you will) that has to be exerted against whatever obstacles being encountered in the process of raising the Quality-level along the vertical-plane.
It is also important to note that whenever a certain Quality-level will have been achieved, all pertinent process-standards have to be updated. These standards are depicted in our framework as a “wedge” that prevents the possibility of “backsliding”.
Notes for Business-to-Business (B2B) Customers
The subject framework will still be applicable to industrial-Customers more particularly, on the Market Demand Services Factors. However, it may require more informed analysis of related supply-chain performance as embodied by established SCOR Level1-metrics, the more prominent of which includes:
- Perfect order fulfillment,
- Order fulfillment cycle time,
- Upside supply chain flexibility,
- Overall value at risk, and
- Total cost to serve.
Having properly performed the aforementioned activities, the stage is now set to gather/ receive QI-ideas supportive of the approved strategies. They will have to emanate from all organizational-levels throughout the supply-chain.
In the process, the otherwise hazy and broadly-scoped strategies will have been broken into concrete actionable projects/ initiatives that can suitably be managed by proven project management methodologies, tools and techniques.
A separate blog will discuss how to filter, process, and execute the quality-initiatives that will be identified. In the meantime, some related micro-blogs can also be viewed at Facebook’s Improving Quality page.\RHE